A level pensions field
In Harland and Wolff Pension Trustees Ltd -v- Aon Consulting Financial Services (IDS 812), the High Court said that, until the scheme’s rules were equalised in 1993, men were entitled to have their benefits levelled up to match those of women members.
What were the basic facts?
Until September 1993, the pension scheme at Harland and Wolff was governed by a set of rules that allowed for a normal retirement age of 60 for women and 63 for men.
Aon was taken on by the trustees to provide actuarial and pension benefit advice, including advice relating to the equal treatment requirement under what was then Article 119 of the Treaty of Rome (now Article 141 of the EC Treaty).
The scheme allowed the trustees to make retrospective amendments that reduced the level of benefits payable to members.
Subsequent to the Barber decision, and following advice from Aon, the trustees equalised the retirement ages at 63 in 1993, effective from 17 May 1990 (the date of the Barber decision). In other words, they reduced the level of the women’s benefits to that of the men.
What was decided in Coloroll?
The ECJ expanded on Barber in Coloroll Pension Trustees Ltd -v- Russell and ors. It said that schemes could have different retirement ages for male and female members, but only for pensionable service up to 17 May 1990. It also said that schemes could equalize benefits either by reducing the retirement age for men or by increasing it for women.
But what about service between 17 May and the date that a scheme was amended – the so-called “Barber” window? The ECJ said that, during this time, the benefits of male members would have to be levelled up so that they were treated the same as female members.
Why were the parties in dispute?
The claimant in this dispute – a trustee – said that Aon should therefore have advised him that male members were entitled to the same level of benefits as female members between 17 May 1990 and 7 September 1993 (when the 1993 deed was executed).
He said that it was clear from the case law that schemes could not achieve equality by reducing the benefits of the women, but only by increasing the rights of the male members. On top of that, men had a separate right under Article 141, which could not be negated by the rules of the scheme.
Aon argued that, although Article 141 requires equality of treatment between the sexes, it does not stipulate that any particular level of benefit has to be provided. The 1993 deed was sufficient in that it equalised the benefits for men and women with effect from May 1990.
What did the High Court decide?
The High Court reviewed the decision of the ECJ in Coloroll, commenting that it was unclear from the judgement whether or not “account is to be taken of a power of amendment which might be exercised – validly under domestic law – to reduce accrued benefits”.
It was clear from the decision that, if there was discrimination in relation to pay and if the scheme had not adopted any measures to eliminate it, then the only way of complying with article 141 was to level up the benefits. But if a rule had already been introduced to eliminate discrimination, there seemed to be no reason why benefits could not be reduced as article 141 just says they should be equal.
However, the court said that another ECJ decision in the case of Smith -v- Avdel clearly prohibited the practice of “levelling down” during the Barber window. It could not be right that schemes could get round the rule with a retrospective amendment.
It followed that the 1993 rules were not consistent with article 141 in this case and that men were entitled to have their benefits levelled up to those of women.